HONG KONG: The city's retail sales for September rose for the first time after falling for seven consecutive months, as statistics released yesterday showed a 2.4 percent increase.

However, some analysts are questioning whether the rebound really means a recovering economy, as the comparison base - last September - was particularly low with the collapse of Lehman Brothers.

In addition, declining figures in third quarter restaurant receipts, also released yesterday, suggest that domestic consumption has not entirely recovered. Fast-food outlets for budget diners are the best performance category.

The value of total retail sales in September rose to HK$21.4 billion, up 2.4 percent from the same month last year. After netting out the effect of price changes over the same period, the volume of total retail sales grew 1 percent.

The Census & Statistics Department said improvement in the September figures was in tandem with a further improvement in local consumer spending and the revival in inbound tourism.

The department added that the gradual improvement of the local economy, the resilience of the labor market and the government's relief measures should continue to support consumer confidence and the retail trade. The rebound in inbound tourism will also help.

"Looking ahead, retail sales should continue to grow," said Daniel Chan, Senior Investment Strategist at DBS Bank. "Unemployment has eased and some big companies, such as in finance, are recruiting," he added.

However, he said the revival in consumption will not be very strong, as sales in September of big-ticket items and motor vehicles fell, while sales of furniture and fixtures also dropped, despite the big jump in property prices. "This suggests there is speculation in the property market and people buying are not real users," said Chan.

Paul Tang, a Senior Economist at Bank of East Asia, was not fully convinced by the September figures. He said the growth in September figures was due to the low-base effect in September last year, when retail sales weakened sharply in Hong Kong after Lehman Brothers' collapse.

"It's a bit weaker than expected; we forecast 3.5 percent growth in sales value. So things are gradually improving, but I wouldn't read too much into the positive number. There's a bit of comfort in that unemployment is stabilizing, even declining a bit. Next month the base of comparison is even worse and we could see 5 percent growth in sales or more."

Total retail sales in the first nine months of the year dropped 3.4 percent in value or 4.2 percent in volume compared with the same period last year.

Hong Kong's GDP growth was back in positive territory in the second quarter, but the government still forecasts the economy will shrink by between 3.5 and 4.4 percent this year.

Restaurants are one sector that is still struggling, with the aforementioned exception of the fast-food establishments. The value of total receipts for the restaurant sector fell to HK$19.9 billion in the third quarter, down 0.5 percent from the same period last year. The value of total purchases by restaurants also dropped 2.6 percent to HK$6.9 billion.

After discounting the effect of price changes, total restaurant receipts fell 1.2 percent in volume in the third quarter.

Analysed by type of restaurant, total receipts of bars dropped 1.5 percent in value. Total receipts of non-Chinese restaurants dipped 0.7 percent, while total receipts of Chinese restaurants fell 1.3 percent. However, total receipts rose 1.8 percent in value for fast-food shops.

Agencies contributed to the story

(HK Edition 11/03/2009 page4)